On Dec 22, 2014, we issued an updated research report on BancorpSouth, Inc. (BXS). Following the announcement of a new share buyback program on Dec 11, the stock price has gained more than 5% since then.
Driven by sound liquidity this Tupelo, MS-based bank’s new share buyback program calls for purchase of roughly 5.8 million shares or 6% of its outstanding shares, boosting shareholders' confidence. Further, company declared a 50% hike in its quarterly cash dividend in Jul 2014.
Notably, during the nine months ended Sep 2014, BancorpSouth paid $16.8 million as cash dividends and bought back shares worth $0.7 million. Undoubtedly, the company’s efforts in improving shareholder value enhanced investors’ confidence in the stock.
Also, we remain optimistic about the company’s efforts to contain costs. After the persistent rise in non-interest expenses over the previous two years, BancorpSouth managed to shrink its non-interest expenses by 2.6% year over year in 2013. Non-interest expenses remained almost stable during the nine-month period ended Sep 2014.
However, we remain cautious owing to net interest margin pressure and the prevailing stringent regulatory landscape. Also, the delay in the proposed merger agreements with Central Community Corp. and Ouachita Bancshares Corp. is a cause of concern, in our view.
Mixed view of the analysts' covering the stock was reflected in the movement of the Zacks Consensus Estimate over the past 60 days. For 2014, it remained stable at $1.24 per share, while moving up 1% to $1.44 per share for 2015.
Stocks to Consider
BancorpSouth currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the south-east banking space include Customers Bancorp, Inc. (CUBI), Middleburg Financial Corporation (MBRG) and Investar Holding Corporation (ISTR). All the three stocks sport a Zacks Rank #1 (Strong Buy).
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